Download or read book On Price Stability and Welfare written by Mr.Etienne B. Yehoue and published by International Monetary Fund. This book was released on 2012-07-01 with total page 36 pages. Available in PDF, EPUB and Kindle. Book excerpt: The financial crisis in the advanced countries that began in 2007 has led central bankers to adopt unconventional policy measures as policy interest rates neared the zero bound. One suggestion (Blanchard, Dell’Ariccia, and Mauro, 2010) has been to raise inflation targets to provide more room for policy rate easing during crises. This paper addresses a different issue: the relationship between inflation and welfare. The literature is surveyed and a model is developed. A key conclusion is that an increase in inflation targets gives rise to additional welfare costs, even after the extra room to maneuver above the zero lower bound for nominal policy rates is taken into account. Based on parameter values that fit U.S. data, the additional welfare costs of raising inflation targets from 2 to 4 percent are estimated at about 0.3 percent of annual real income. A rise to 10 percent would yield additional welfare costs of about 1 percent of real income. Other parameter values yield welfare costs as high as 7 (respectively 30) percent of real income for raising inflation targets from 2 to 4 (respectively from 2 to 10) percent. The full costs of raising inflation targets are likely to be higher because the model used to generate these estimates does not account for higher inflation-induced volatility.

Download or read book Welfare Costs of Inflation Seigniorage and Financial innovation written by Mr.Jose De Gregorio and published by International Monetary Fund. This book was released on 1991-01-01 with total page 34 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines the welfare effects of mitigating the costs of inflation. In a simple model where money reduces transaction costs, a fall in the costs of inflation is equivalent to financial innovation. This can be caused by paying interest on deposits, indexing money, or “dollarizing.” Results indicate that financial innovation raises welfare in low inflation economies while reducing it in high inflation economies, due to the offsetting indirect effect of higher inflation to finance the budget.

Download or read book Welfare Cost of Low Inflation written by Mr.Howell H. Zee and published by International Monetary Fund. This book was released on 1998-08-01 with total page 22 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper provides general equilibrium estimates of the steady-state welfare gains of lowering inflation from a low level to close to price stability, using an overlapping-generations growth model. Money demand is modeled on the basis that real money balances are a factor of production. Assuming a standard Fisher equation modified by the presence of an income tax, it is found that inflation unambiguously reduces capital intensity, drives up the before-tax real rate of return to capital, and unambiguously imposes a life-time welfare cost. This welfare cost is, however, quantitatively very modest (under 0.2 percent of GDP annually) within reasonable ranges of all parameter values.

Download or read book A Transitional Analysis of the Welfare Cost of Inflation written by Clark A. Burdick and published by . This book was released on 1997 with total page 56 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book The Welfare Effects of Inflation written by Karl-Heinz Tödter and published by . This book was released on 2007 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Inflation and Welfare written by Ben R. Craig and published by . This book was released on 2010 with total page 43 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper extends recent findings in the search-theoretic literature on monetary exchange regarding the welfare costs of inflation. We present first estimates of the welfare cost of inflation using the welfare triangle methodology of Bailey (1958) and Lucas (2000). We then derive a money demand function from the search-theoretic model of Lagos and Wright (2005) and we estimate it from U.S. data over the period 1900-2000. We show that the welfare cost of inflation predicted by the model accords with the welfare-triangle measure when pricing mechanisms are such that buyers appropriate the social marginal benefit of their real balances. For other mechanisms, welfare triangles underestimate the true welfare cost of inflation because of a rent-sharing externality. We also point out other inefficiencies associated with noncompetitive pricing, which matter for estimating the cost of inflation. We then illustrate how endogenous participation decisions can mitigate or exacerbate the cost of inflaion, and we provide calibrated examples in which a deviation from the Friedman rule is optimal. Finally, we discuss distributional effects of inflation.

Download or read book Inflation and Welfare written by Hans-Werner Sinn and published by . This book was released on 1999 with total page 28 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Welfare Freedom and Inflation written by Wilhelm Röpke and published by . This book was released on 1964 with total page 96 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book The Welfare Cost of Permanent Inflation and Optimal Short run Economic Policy written by Martin S. Feldstein and published by . This book was released on 1977 with total page 32 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Inflation written by John Fender and published by . This book was released on 1990 with total page 216 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book On Inflation as a Regressive Consumption Tax written by Andrés Erosa and published by London : Department of Economics, University of Western Ontario. This book was released on 2000 with total page 39 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Welfare Costs of Inflation written by Mário Henrique Simonsen and published by . This book was released on 1994 with total page 58 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book A Time varying Approach of the US Welfare Cost of Inflation written by Stephen M. Miller and published by . This book was released on 2014 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Inflation and Economic Welfare in the United States written by Andrew F. Brimmer and published by . This book was released on 1973 with total page 29 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Wages Welfare Costs and Inflation in Classical Athens written by William T. Loomis and published by University of Michigan Press. This book was released on 1998 with total page 432 pages. Available in PDF, EPUB and Kindle. Book excerpt: A seminal reference and analysis of wages and costs in Athens

Download or read book The Health Education and Welfare Income Security Social Services Conference on Inflation Report written by United States President of the U.S. and published by . This book was released on 1974 with total page 614 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book The Welfare Costs of Inflation written by Luca Benati and published by . This book was released on 2019 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: We estimate the welfare costs of inflation originating from lack of liquidity satiation - as in Bailey (1956), Friedman (1969), Lucas (2000), and Ireland (2009) - for the U.S., U.K., Canada, and three countries/economic areas (Switzerland, Sweden, and the Euro area) in which interest rates have recently plunged below zero. We pay special attention to (i) the fact that, as shown by recent experience, zero cannot be taken as the effective lower bound (ELB); (ii) the possibility that, as discussed by Mulligan and Sala-i-Martin (2000), the money demand curve may become flatter at low interest rates; (iii) the functional form for money demand.; and (iv) what the most relevant proxy for the opportunity cost is. We report three main findings: (1) allowing for an empirically plausible ELB (e.g., -1%) materially increases the welfare costs compared to the standard benchmark of zero; (2) there is nearly no evidence that at low interest rates money demand curves may become flatter: rather, evidence for the U.S. (the country studied by Mulligan and Sala-i-Martin (2000)) clearly points towards a steeper curve at low rates; and (3) welfare costs are, in general, non-negligible: this is especially the case for the Euro area, Switzerland, and Sweden, which, for any level of interest rates, demand larger amounts of M1 as a fraction of GDP. For policy purposes the implication is that, ceteris paribus, inflation targets for these countries should be set at a comparatively lower level.